Upon Further Review

A special review by the Arizona auditor general raises questions about how the Attorney General's Office spends millions of dollars each year in representing state agencies.

In the review, ordered by the Legislature, auditors criticized the Attorney General's Office for failing to standardize agreements with state agencies it represents, and for failing to follow the state's procurement code when hiring outside attorneys.

"The Office of the Attorney General has not fulfilled its managerial responsibility to be adequately accountable to client state agencies, the Legislature and the citizens of Arizona for the resources it expends," auditors reported.

In its written response to the audit, the Attorney General's Office largely brushed aside the criticisms, contending they are inaccurate, of minor importance or the result of inadequate computer systems.

Earlier this year, the Arizona Legislature appropriated $98,000 for the Auditor General's Office to review financial records relating to legal services provided to state agencies through the attorney general. That appropriation came after attempts to strip the attorney general of his authority to represent many state agencies failed.

At that time, the Legislature also created a committee to look at legal representation of state agencies. The legislative committee's report is due to be released in January.

The auditor general's staff said the lack of a centralized filing system in the Attorney General's Office made it impossible for it to conduct as complete a review as required by the Legislature.

But state auditors did find that the Attorney General's Office has not complied with the state procurement code in some instances. As a result, contracts have been awarded to private law firms that do not meet the attorney general's own requirements.

Auditors also found instances in which firms were overpaid for services. Also, the auditors said, they could not find some contracts--again because the Attorney General's Office lacks a centralized filing system.

And the auditor general reported that the Attorney General's Office has not given state agencies adequate information about the amount of work done under legal representation contracts known as intergovernmental agreements.

During their review, state auditors sampled 30 proposals from law firms that wanted to provide some of the $17 million in outside legal services purchased by the Attorney General's Office during the past three fiscal years. The auditors said they found that 17 of those proposals were incomplete or otherwise did not conform to state guidelines. Also, the auditors said, there were no written evaluations of the proposals accepted by the Attorney General's Office--meaning there was no way to know what reasoning was used to award the contracts.

Both of these failures represent violations of the state's procurement code, the auditors said.

In some cases, applicants were asked to revise incomplete proposals. Such revisions also violate the procurement code, the auditors said.

As part of their review, auditors examined a sample of 30 payments made to law firms contracting with the state. The auditors said they couldn't locate four of the 30 payments requested for review. But, they said, four other payments exceeded the maximum rate allowed by contract. And there were two cases in which law firms were paid twice for the same service. The auditor general's report did not give the amount of those overpayments.

Another portion of the auditor general's review covered legal representation agreements between state agencies and the Attorney General's Office. There were 60 such intergovernmental agreements totaling $9.3million in the most recent fiscal year.

The Auditor General's Office said the terms of these agreements vary wildly, depending on which agency is involved. And the auditors criticized the Attorney General's Office for failing to provide state agencies with detailed information about how much time attorneys were spending on specific cases. Instead, agencies are provided only with summaries of spending.

The auditor general's review was authorized under a law that is a watered-down version of legislation that attempted to usurp power from Attorney General Grant Woods, a political rival of Governor J. Fife Symington III and conservative legislators. The original bill called for abolition of the attorney general's 270-lawyer civil division; it was to be replaced with a new agency controlled by the governor.

At the time, Woods-friendly special-interest lobbies, including the Sierra Club, dubbed the move "vindictive silliness" and urged their members to voice opposition. They did. So did moderate Republicans, and the power grab was thwarted in the Senate Government Reform Committee.

In its response to the auditor general's report, the Attorney General's Office showed it hasn't forgotten the legislative attack on its turf. And it blamed problems in conducting the audit on the Legislature's failure to fund new computer systems for the Attorney General's Office.

"The Auditor's Report illuminates a complaint raised by the Attorney General's Office: the lack of funding for adequate automation and for employment of attorneys and staff," the Attorney General's Office stated. "This information, however, should not be new to members of the Arizona Legislature. Despite the lack of funding, the Office provides excellent legal services to the boards, agencies, and citizens of the State of Arizona."

The office's response to other criticisms was mixed.
The Attorney General's Office agreed that law firms shouldn't have been overpaid, and concurred with the auditors' recommendation that a centralized filing system be used. But the attorney general contended his office has followed the state procurement code. And, he said, agreements with state agencies vary because some of those agencies refuse or are unable to pay the full cost of legal representation.